In the town of Gibsonton, Florida, two brothers are playing in their home outdoor swimming pool one night. However, a mysterious figure approach them from the woods surrounding their home and jumps into the pool without them noticing. As the brothers are playing, they notice something was wrong and before they left the pool, the figure emerged from the water. It was revealed to be a man with a severe skin disease all over his entire body. The man was actually the children's father and scared his children for a bit fun. After some laughs in the pool, the father told his children to go back into the house as it was late and time for them to go to bed. As the kids agreed, they left the pool but the father stayed behind to swim. However, an unknown mysterious figure was approaching the pool from the woods. The man heard the noise and was looking around to see what it was but it was too late as the unseen figure killed the father from the pool.

Mulder and Scully were sent in to investigate the murder of the man known as the "Alligator Man" as he was an entertainer for a circus with a band of strange and talented individuals. Mulder's supernatural focus for the episode is the Fiji Mermaid, a hoax used as a sideshow attraction that first appeared in the mid-1800s. During their investigation, Mulder and Scully shift their suspicion around three of the inhabitants of the city: "The Conundrum", a heavily tattooed man who never talks and will "eat anything"; "Dr. Blockhead", a "body manipulator" and "Jim-Jim the Dogface Boy", a former performer who later became the local sheriff.

During their investigation, Scully points out to Mulder that the both of them have been wrongly suspicious of many of the circus freaks in town simply because of their abnormalities, which could be considered racial profiling of a sort.

The supposed "Fiji Mermaid" ends up being Leonard, the underdeveloped in fetu twin of Lanny, whoever that is. Leonard is capable of exiting and then returning into Lanny's body. Lanny mournfully suggests that the motivation behind his brother's attacks is that he is seeking a new brother, as a replacement for the alcoholic Lanny, by attempting to burrow into their side. Lanny later dies from his drinking problem, which severely damaged his liver. Scully says that his autopsy revealed many abnormalities in the arrangement of his blood system, esophagus, and other internal organs, which were almost umbilical in nature.

After Leonard disconnects from Lanny for the final time, he is chased by Mulder and Scully into a circus funhouse, where their attempts to catch him prove fruitless. Outside, Leonard attacks the Conundrum as he puts out his garbage. Mulder and Scully exit the funhouse but are unable to find Leonard. They discover the Conundrum lying on the ground with a hugely distended stomach and a contented smile, suggesting that he killed and devoured Leonard.

The episode ends with Dr. Blockhead philosophically commenting to Scully about how what the future really has to worry about is not abnormal circus freaks like the inhabitants of Gibsonton, but instead everyone turning into people that look like Mulder: "buttoned-down suit-and-tie wearing office drones with no individuality." Meanwhile, Mulder observes the Conundrum in a state of discomfort, leading Mulder to question him about it. The Conundrum replies that the cause of his discomfort is "probably something I ate," uttering his first line in the show. As Dr. Blockhead and the Conundrum drive away, Mulder and Scully turn to each other with confused and somewhat horrified looks on their faces.

Although the setting of this installment is established as Gibsonton, Florida, the train shown briefly in the episode shows rail cars that would not be common in that state. This is due to the filming location in the Pacific Northwest and proximity to Canadian railroads.